EcoCash Holdings results: mobile money business struggled but Steward Bank picked up the slack

There are bands that have names like Afrika Revenge, U2 etc. Then there are bands that go with the lead singer’s name e.g. Thomas Mapfumo and the Blacks Unlimited. This second type of band name looks to capitalise on the fame of the frontman who made a name before assembling the band. Then there are some that go with just the frontman’s name even though they are a band like EcoCash Holdings.

When EcoCash the mobile money service provider split up with Econet in 2018, they became part of Cassava, which was listed separately on the ZSE. Less than 3 years later the band name was changed from Cassava to EcoCash Holdings “to avoid confusion and to align the name of the company with the company’s main operating subsidiary.”

Yes, it’s less confusing to have EcoCash (Pvt Ltd) be a subsidiary of EcoCash (Holdings).

One wonders how attractive the supporting cast would be if EcoCash were not bundled with them. Remember EcoCash Holding’s portfolio comprises Fintech, Insurtech, On-Demand Services, e-Commerce, Agritech, Healthtech, Edutech, Steward Bank and VAYA Services. Let us look at how the group performed in the year ending February 2022.

EcoCash

“The Fintech businesses remained the largest contributor to revenue, at 80% (2021: 77%).” By Fintech businesses they mean EcoCash and Steward Bank.

This has been the case from the very beginning. In 2020 EcoCash alone accounted for 75% of group revenues. That was down to 60% in 2021. It looks likes that was down to around 55% in 2022.

Could it be that the supporting cast is growing into its own and contributing more to group revenues, reducing the group’s reliance on EcoCash? Not really. It is because EcoCash has been facing its own challenges in the last few years.

• They lost 3.1 million customers in 3 years, and the high-value money traders at that. In 2022 alone they lost 700,000.
• Merchants transacting every month fell from 47,002 in 2021 to 33,557 in 2022. Probably because of a combination of dollarisation and the RBZ’s directive that stopped direct transactions from the merchant wallet.
• In 2021, EcoCash’s revenues were down 40% but look to have rebounded in 2022 but only by around 24% by my calculations.
• International remittances have not been growing, the value of remittances received on the platform was US$7.4m in 2021 and US$7.5m in 2022.

When we talked about them losing 3.1 million customers we touched on the regulatory challenges that have stunted their growth and those include transaction limits, the decimation of the agent network, regulated tariffs, limits on the number of accounts per individual, ZW$ collapse and new competition entering the fray.

With the darling of the group somewhat struggling, how has the supporting cast fared?

Steward Bank

The bank had a good year. Profit before tax was up 235% thanks to a 139% increase in net interest income (from lending activities) and a 25% increase in non-funded income (charges, fees and commissions).

The interest income increase came partly from 322,924 new people accessing Kashagi loans worth ZW$1 billion and ZW$937 million worth of SME loans.

It’s refreshing to see interest income grow faster than charges and commissions. However, non-funded income is still around 70% of net operating income. That sounds high but a few years back charges and fees breached over 90% for some banks.

The net operating income of $7.51 billion represents around 25% of EcoCash Holdings revenues.

As if the increases in revenue weren’t enough, operating expenditure was actually down. 50% of the drop was due to a decrease in impairment of intangible assets but administrative expenses were down too.

With EcoCash and Steward Bank accounted for, that’s 80% of revenue done.

The backup dancers

Insuretech saw its contribution to group revenue dip slightly from 15% to 14%. EcoSure remains the main Insuretech business.

What I can say is that we are seeing fewer and fewer complaints from people being signed up for EcoSure without their consent. That is a positive because in past years those complaints called into question the growth EcoSure was reporting.

They say their market share grew by 8% from 2021. Could Zimbabweans be starting to warm up to EcoSure after the Ecolife debacle? It’s starting to look so.

With Insuretech accounted for that’s 94% of EcoCash Holdings group revenue spoken for.

Vaya

EcoCash says Vaya is the Holding company for their platform-based solutions. Of the Vaya solutions, most are familiar with Vaya Mobility which provides on-demand ride-hailing services.

On the ground, all is not rosy with the ride-hailing service. For one, the experience with 3rd party driver partners differs from the one with their 1st party drivers. What’s crazy is that the 3rd party guys are flexible and offer better service.

Some of that has to do with 1st party drivers only taking USD cash or EcoCash. 3rd party drivers will take whatever you have and will even offer a better rate than the 1st party guys do. The official rate used by 1st party drivers is higher than the street rate and 3rd party guys do not use it.

Then there is the app. For some reason, the Android app does not have an RTGS option and the iOS one does not have the USD option. Why? Who knows?

The other well-known Vaya business is Mars, the emergency medical care services provider. It boasts 140,000 members and that sounds good.

The rest of the Vaya businesses are an enigma. Ownai, the e-commerce platform looks dead, it’s nothing but empty menus for the most part. Apart from groceries, most categories are empty, when I checked I couldn’t help but chuckle when I saw the lone item under Laptops and Desktops is a $6.42 32GB Flash drive.

I don’t imagine the other Vaya businesses like Maisha and Akello or even the Vaya digital farmer are killing it. There are way too many businesses for them to only contribute 6% to group revenues. The language in the EcoCash Holdings report shows that they still view these businesses as potential. Will they unlock that potential? Time will tell.

The band plays on

EcoCash Holdings group revenues were up 26% to ZW$29.9 billion from $23.8 billion in 2021. That’s an increase of $6.1 billion and Steward Bank was responsible for half of that increase, having seen a $3 billion increase in revenue.

That was then solidified by the pesky foreign exchange losses dropping by $5.1 billion in the same year.

The other positive was the expert cost management on display. We saw how Steward Bank actually saw admin expenses decrease, that’s impossibly good in this inflationary Zimbabwean environment. For the whole group, admin expenses, which form the bulk of operating expenses, only increased by about $1 billion.

In the year ended February 2022, the band that is EcoCash Holdings was more of a band than a lone act supported by session musicians. As EcoCash, the mobile money service, had a less-than-stellar year, Steward Bank in particular picked up the slack.

That’s how it should be, when the lead singer hits the wrong note, the guitar player should mask that with a lick. However, EcoCash still feels like a duo like Daft Punk. The Fintech guys are doing the heavy lifting.

Also read:

EcoCash has lost 3.1 million customers since 2020, what or who is to blame?

Cassava results: EcoCash revenue drops by $5bn, Steward Bank’s by $1.4bn in tough year